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Management Economics in a Large Retail Organization

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  • Siebert, W. Stanley

    ()
    (University of Birmingham)

  • Zubanov, Nikolay

    ()
    (Goethe University Frankfurt)

Abstract

We study the impact of and reward to middle management ability using data from 245 stores of a nationwide retailer. The company scores six broad areas of management practice, the most important of which turns out to be "commercial awareness", where able managers raise labour productivity by 17% compared to less able. We show that the managers' incentive scheme is implicitly an insurance one, with managers taking a share in deviations of actual sales from expected. At the same time, abler managers do not receive higher pay all else equal, which implies that middle management ability is not fully tradable.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3645.

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Length: 60 pages
Date of creation: Aug 2008
Date of revision:
Publication status: published in: Management Science, 2011, 56(8), 1398-1414
Handle: RePEc:iza:izadps:dp3645

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Keywords: productivity; business economics; firm behaviour; compensation methods; management;

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